Highlighting Chapter 7 Bankruptcy

Posted on | June 20, 2008 | Leave a Comment

One classification of bankruptcy called Chapter 7 bankruptcy is one option which can be availed of under the Bankruptcy Code. This form of bankruptcy is notopen to everyone. Only certain people can file|are eligible to this type of bankruptcy and only peoplein certain situationscan file this type of bankruptcy.

Who Can File Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is available to individuals and some businesses. In order to file Chapter 7, assets should belimited to those that can be claimedas exempt.

In some cases, though, Chapter 7 may be best even if someone has more assets. The court, though, may rule that a person can notfile a Chapter 7 if their assets are high enough to cleartheir debt.

What is the Process chapter 7 bankruptcy

The process of filing a Chapter 7 bankruptcy starts with collecting all the information about your debts and your financial situation. You will be required toundertake a counseling sessionthat will help you to decide if filing bankruptcy is the best option.

You will then be able to start filing out the proper forms and filing them with the court. Over the next few months or so you will be required to attend court proceedings andlater issue a decision whether your bankruptcy application is meritorious or not.

The entire process can take a considerable time but the process will allow you to enjoy moratorium from debt collection by creditors.

Risks of a Chapter 7 Bankruptcy

Bankruptcy is not a simple solution when you do not want to pay your debts. In fact, recent changes in the bankruptcy laws have made filing bankruptcy more difficult and in some cases impossible.

Your assets are in jeopardy because they can be repossessed to repay your debts. You are also going to end up witha damaged credit record. The effects of a bankruptcy can last seven to ten years and can reallyhurt your ability to get and other forms of credit in the future.

How about chapter 13 bankruptcy?

Filing Chapter 13 bankruptcy instead of Chapter 7 may prove to be more acceptable under new laws especially if your income is higher than the required amount.The court can decide that a repayment a better alternative to address your financial problem instead of actually clearing your debts.

Filing bankruptcy should not be your recourse to escape from financial obligations because whether you are eligible for bankruptcy or not you will still end up in some way paying your dues.Additionally, not every debt can be settledthrough bankruptcy. If you take the process seriously then you should end up with the result you desire.